Late last week, the U.S. Department of Labor (“DOL”) announced that it plans to rescind the Trump DOL rule that tightened the standards by which two or more companies could be deemed a joint employer for purposes of the Fair Labor Standards Act (“FLSA”).  The same day, the DOL announced its plans to withdraw the Trump DOL rule that loosened the standards by which an individual could be deemed an independent contractor rather than an employee under the FLSA.  (The joint employment rule is being “rescinded” because it actually went into effect on March 16, 2020, at least in part; the independent contractor rule is being “withdrawn” because the DOL is taking action before its effective date.)

Neither move is unexpected, because as we wrote about here and here the Biden DOL had signaled several times that it intended to revisit numerous policy decisions by its predecessors.  In addition, the joint employment rule never fully went into effect because of a federal court order striking the rule’s provisions regarding “vertical joint employment,” which refers to the scenario in which an employee is hired through a staffing agency but assigned to perform services on behalf of a different organization.  The order was the result of a lawsuit filed against the Trump DOL by 17 states and the District of Columbia that challenged the merits of the rule.

Technically speaking, the DOL’s announcements are “proposals” to rescind and withdraw the joint employment and independent contractor rules, respectively, and interested parties can submit comments to the DOL about either rule by April 12, 2021.  However, there is little chance that the rules will continue in their present form.

One interesting question is what the DOL plans to do to address these topics once the current rules are out of the picture.  Neither the FLSA itself nor any other DOL regulations define “joint employer” or “independent contractor” in any meaningful detail.  For decades, courts and enforcement agencies have had to rely on a hodgepodge of case law and regulatory guidance to decide threshold issues like whether two or more employers could be liable for a minimum wage or overtime violation under the FLSA, or if an individual was an employee rather than an independent contractor and therefore entitled to the FLSA’s protections.  Whatever their substantive virtues, the Trump DOL’s rules at least clarified what standards apply to resolve these questions.  Unless the Biden DOL replaces the to-be-rescinded/withdrawn rules with new ones, the status quo will return to this state of uncertainty.

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Photo of John Dudrey John Dudrey

John Dudrey is a partner in the firm’s Labor & Employment group. His practice focuses on wage and hour compliance, representation of employers with unionized workforces, and complex advice and counsel matters, in addition to general labor and employment practice.

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John Dudrey is a partner in the firm’s Labor & Employment group. His practice focuses on wage and hour compliance, representation of employers with unionized workforces, and complex advice and counsel matters, in addition to general labor and employment practice.

Click here for John Dudrey’s full bio.

Photo of Chris Wall Chris Wall

Chris Wall is a trial lawyer, managing all phases of litigation, including trials and appeals in state and federal courts as well as arbitrations and administrative proceedings. He uses insights from litigation to provide his clients with strategic advice on how to avoid…

Chris Wall is a trial lawyer, managing all phases of litigation, including trials and appeals in state and federal courts as well as arbitrations and administrative proceedings. He uses insights from litigation to provide his clients with strategic advice on how to avoid litigation before it starts and resolve disputes in the most cost-effective manner. He works with businesses to navigate a wide variety of matters including labor issues, wage & hour, wrongful termination, and discrimination claims. Chris draws on his experience as a judicial extern to the Honorable John Coughenour, as a law clerk for the Alaska Supreme Court, and in commercial and environmental litigation to meet the needs of his clients.

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Photo of Adam Belzberg Adam Belzberg

Adam Belzberg represents and advises employers, from small businesses to international corporations, in all aspects of labor and employment law. He has particular experience representing employers in the agriculture, construction, and energy industries. Adam’s litigation experience includes class action and individual litigation arising…

Adam Belzberg represents and advises employers, from small businesses to international corporations, in all aspects of labor and employment law. He has particular experience representing employers in the agriculture, construction, and energy industries. Adam’s litigation experience includes class action and individual litigation arising under various state and federal employment laws. He also provides daily advice and counsel to employers on employment issues including employment policies, non-compete, non-solicitation, and trade secret issues and regularly represents management before the NLRB in cases involving union representation and unfair labor practices, negotiating collective bargaining agreements, and arbitrating labor and employment disputes.

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Photo of Ryan Kunkel Ryan Kunkel

Ryan Kunkel is a trial lawyer who litigates employment-related disputes in federal and state court and private arbitration, and counsels employers to help mitigate risk and prevent disputes from reaching litigation in the first place. Ryan specializes in pursuing and defending cases involving…

Ryan Kunkel is a trial lawyer who litigates employment-related disputes in federal and state court and private arbitration, and counsels employers to help mitigate risk and prevent disputes from reaching litigation in the first place. Ryan specializes in pursuing and defending cases involving unfair competition, such as employee non-competition, non-solicitation, and trade secret obligations, especially in the financial and manufacturing industries. His practice also includes litigating before the National Labor Relations Board, arbitrating labor grievances, and helping management navigate and resolve complex labor disputes, including organizing drives and work stoppages.

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